How the War for Talent looks different in the 2020s

CEOs are asking their human resources leaders to implement talent management strategies to beat the Great Resignation and attract new employees to their brands. This request is not a nice to have. It is essential for business growth. Talent management fueled profitable growth at the start of the century, but then it fizzled. What happened, and how do we remake talent management for the 2020s?

Executives I lobbied in the 2000s to spend more on developing their best technical and managerial talent easily related to the 2001 book The War for Talent. It was all the rage in the late 1990s as a critical driver for corporate performance. Then the bubble burst, there was a recession, and employers cut their recruiting and talent development spending, thinking they no longer needed it.

They were wrong.

As the economy rebounded in the early 2000s, the demand for talent resumed due to the US labor shortage (Yes, the same US labor shortage that has worsened and is hurting your recruiting now.) With it, companies put back in place the talent strategies following the research-backed advice from the War for Talent. Central to its approach is a deep conviction among executives and managers to have a talent mindset. That is, competitive advantage comes from having better talent at all levels of the organization.

The talent strategies are the following:

  1. Create a winning employee value proposition (EVP) that will allow your company to uniquely attract talent. EVP defines your organization’s purpose, the work performed, organizational culture, and the benefits employees will receive.
  2. Move beyond recruiting hype to build a long-term recruiting strategy (which includes career development).
  3. Use job experiences, coaching, and mentoring to cultivate the potential in managers.
  4. Strengthen your talent pool by investing in A players, developing B players, and acting decisively on C players.

Companies such as GE, The Home Depot, Allied Signal (now Honeywell), Ford Motors, and Amgen implemented these strategies with great fanfare. I implemented these strategies and found they worked extraordinarily.

But this strategy also had its downsides.

First, was Silicon Valley. It became popular to maintain that employees didn’t need internal talent development strategies because employees would take it upon themselves to develop themselves by moving to new employers to gain necessary experiences and significantly higher pay and benefits. While Silicon Valley still has a powerful ecosystem for innovation that all large companies could learn from, today, as Derek Thompson wrote in The Atlantic, it has broken all of its promises to remake the world. Its “break all the rules” mantra has led to incredible unethical and unlawful behavior (such as Theranos). It has toxified the web and failed at many initiatives, such as Webwork’s redesigning of the office. Today, it is scrambling to prevent more employees from leaving for other tech centers and to remake itself.

Second, was the gig movement. It advocated hiring talent online for the time you need them, and having no legal severance requirements during the next business downturn. You can avoid performance management headaches by providing the gig platform or the temporary agency feedback on the employee. The platform would provide a rating on the employee (like Yelp for restaurants), or the temp agency would provide performance feedback and a review.

Third, was the mean-spirited and rigorous “acting decisively on C players” advice, which meant laying them off or discharging them. Many companies such as Ford, GE, Microsoft, and Honeywell would cut 10 percent of their workforce every year to drive out poor performers, and then hire better talent. They were following the recommendations of research conducted by Professor Steven E. Scullen who recommend performance ratings and forced ranking of employees based on those ratings. His research showed the strategy works — at first. Unfortunately, after a few years, it backfires. However, few caught on to this significant issue and its disastrous effect on work culture. As work cultures become more obedient to top management direction and less collaborative and innovative, no one wants to take the risk of suggesting a new idea and then falling with it. Failing meant being in the bottom 10 percent – and being laid off.

Even on those occasions when managers lead truly high-performing teams, someone still must be ranked low, despite meeting performance plan goals. To replace that person with an unknown is expensive. Ed Lawler, the author of Treat People Right, contends that forced ranking creates a dysfunctional and hyper-competitive workplace.

Development Dimensions International, Inc. (DDI) in 2004 found that only 39 percent of companies using forced ranking systems found them even moderately effective.  Several years ago, many companies abandoned the practice of taking out the bottom 10 percent of poor performers annually, including GE, where CEO Jack Welch once championed it. Ford, Goodyear, and Capital One stopped their forced ranking systems after age-discrimination cases.

Fourth, was the problem of not doing enough to seek, recruit, and develop diverse and female talent. When GE tried unsuccessfully to purchase Honeywell in 2003, GE’stop management stopped many of the diversity initiatives. For example, the company was stopped from recruiting from America’s traditionally black colleges in favor of their “targeted schools,” such as Harvard and Wharton.

Fifth and finally, Covid-19 proved that working remotely and having great digital technology to support the workforce and teams is essential. In fact, remote work is so popular, your best employees will leave you if you require them to return to the office to work for an employer who allows more flexibility and hybrid work models. For most employees, there is no going back to the Monday – Friday in the office when employees can do most of their work through their computers, with digital phones, supporting technology, new hybrid work norms, and supportive managers.

Talent Management for the 2020s

In the 2020s, how can companies restore the compelling talent mindset that drove company results and overcome the shortcomings when initially implemented in the 2000s? It is relatively simple.

  1. Build a compelling brand and thriving, performance-based, and innovative culture. Adopt a leadership style among your managers to provide constant feedback and coaching and to show compassion. Do not go back to the method of forced ranking. It doesn’t work in today’s world, and it breeds the toxic cultures that drive more resignations than poor pay. It is fine to have annual performance reviews and to provide these assessments on individuals into the company’s talent management system.
  2. The hyped-up enthusiasm for the gig economy is waning. During Covid-19, gig workers were quickly dismissed before employees. Uber and Lyft are facing major legal challenges with it globally. And Millennials want more than gig work can offer. They want to work for an employer who will provide them with excellent pay and benefits, paid time off, hybrid work models, transparency, empathetic managers (not algorithms), and careers. Employers with a talent mindset and an effective EVP can attract these workers into their organizations. Highly skilled technical employees will always be able to drive a premium for their services in the gig economy or as a contract worker. Save the gig economy or contract workers with these unique skills.
  3. Attract women and people of color. We know how to do this and improve performance. It really takes a strong commitment from top management and dedication to making it work. McKinsey’s research indicates that companies with more diversity from the board through management to the workforce do better financially. Every employer needs to recruit and retain all the skilled talent they find.

Talent management in the 2020s does not have to be mean-spirited. Organizations need to create the employer value propositions that today’s younger employees want and have a talent mindset. Talent management will drive your profitable growth when implemented with deep conviction.

About Victor Assad

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne.. He works with companies to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at 

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